Management Report: Areas for Improvement in the Federal Reserve Banks' Information Systems Controls
Highlights
What GAO Found
During GAO's audit of the Schedules of Federal Debt managed by the Department of the Treasury’s (Treasury) Bureau of the Fiscal Service (Fiscal Service) for the fiscal years ended September 30, 2016, and 2015, GAO identified one new information systems general control deficiency related to systems maintained and operated by the Federal Reserve Banks (FRB) on behalf of Treasury that are relevant to the Schedule of Federal Debt. This control deficiency related to access controls. In a separately issued Limited Official Use Only report, GAO communicated to FRB management detailed information regarding the new information systems general control deficiency and made one recommendation to address it.
In addition, during GAO’s follow-up on the status of FRBs’ corrective actions to address information systems control-related deficiencies and associated recommendations contained in GAO’s prior years’ reports that were open as of September 30, 2015, GAO determined that corrective action was complete for four of the five open recommendations and corrective action was in progress for the remaining open recommendation related to configuration management. In the Limited Official Use Only report, GAO communicated detailed information regarding actions taken by FRBs to address the control deficiency related to the open recommendation.
While GAO identified new and continuing control deficiencies relating to information systems that are relevant to the Schedule of Federal Debt, GAO does not consider them individually or collectively to be material weaknesses or significant deficiencies. The potential effect of these new and continuing control deficiencies on the Schedule of Federal Debt financial reporting for fiscal year 2016 was mitigated primarily by FRBs’ program of monitoring user and system activity and Fiscal Service’s compensating management and reconciliation controls designed to detect potential misstatements of the Schedule of Federal Debt. Nevertheless, these control deficiencies increase the risk of unauthorized access to, modification of, or disclosure of sensitive data and programs, and therefore warrant the attention and action of management.
Why GAO Did This Study
GAO is required to audit the consolidated financial statements of the U.S. government. Because of the significance of the federal debt held by the public to the government-wide financial statements, GAO audits Fiscal Service’s Schedules of Federal Debt annually. As part of these audits, GAO performs a review of information systems controls over key financial systems maintained and operated by FRBs on behalf of Treasury that are relevant to the Schedule of Federal Debt.
This report presents the one new deficiency identified during GAO’s fiscal year 2016 testing of information systems controls over key financial systems maintained and operated by FRBs on behalf of Treasury that are relevant to the Schedule of Federal Debt. This report also includes the results of GAO’s fiscal year 2016 follow-up on the status of FRBs’ corrective actions to address information systems control-related deficiencies and associated recommendations contained in GAO’s prior years’ reports that were open as of September 30, 2015.
Recommendations
In a separately issued Limited Official Use Only report, GAO made one recommendation to address the one new information systems general control deficiency related to access controls. In commenting on a draft of the separately issued Limited Official Use Only report, the Board of Governors of the Federal Reserve System stated that the agency takes control deficiencies seriously and that FRB management has taken corrective action to address the one new information systems general control deficiency that GAO identified during its fiscal year 2016 audit. The Board of Governors further stated that FRB management has also addressed the remaining open recommendation from GAO’s prior year’s report. GAO plans to follow up to determine the status of corrective actions taken on these recommendations during its audit of the fiscal year 2017 Schedule of Federal Debt.